Lombard: fleets misunderstanding salary sacrifice

The leasing firm said that a large number of fleets still think salary sacrifice is a money-saving opportunity, when in fact the intention is that they should be cost neutral.

Paulo Larkman, head of fleet consultancy services for Lombard, said: ‘Salary sacrifice is the buzz term right now. This time last year almost no one was talking about it but probably 50% of our major customers are now.

‘However, we have found that there is a lack of understanding about exactly what this method of funding is – how it differs from an ECO scheme, for example.

‘It’s important to realise that salary sacrifice schemes are fundamentally for the benefit of employees, and not to save money for the customer. They are part of an individual’s terms of employment and remuneration package, unlike an ECO scheme. That can bring problems if their technical delivery is not spot-on.’

He added that it was vital that firms offer cars that people want to drive, and perceive these cars differently from the “job” fleet cars, and understand the implications of early termination when an employee leaves.